Online casino gambling is heavily restricted in the US, with only six states having legalized the activity at the time of writing this. The limited legal landscape prompted the emergence of sweepstakes casinos, which circumvent strict federal casino gaming laws by using virtual currency. This unique and innovative approach provides a legal route for players in most US states to enjoy casino-style games and win real prizes.
Besides federal oversight, states also have the authority to regulate sweepstakes casinos. While these casinos are accessible in most US states, specific regions implement laws to restrict online gaming to varying degrees. This article discusses sweepstakes casino gaming laws by state to help you understand how to have a safe, legal, and enjoyable gambling experience.
Are Sweepstakes Casinos Legal in the US?
Absolutely! Sweepstakes casinos are legal in all US states except Washington, Idaho, Nevada, and Michigan. While traditional online casinos are only constitutional in six states (Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia) and Rhode Island to join the group in March 2024, sweepstakes platforms offer widespread availability, allowing players from states with strict internet gambling laws to legally enjoy casino gaming services.
Unlike regular gaming sites where players gamble with real money, sweepstakes casinos use virtual currency (gold coins and sweeps coins), which enables them to achieve legality in most US states. Gold coins have no real value and cannot be exchanged for cash. On the other hand, sweeps coins have monetary value and can be redeemed for real money.
Another important difference between these currencies is that you can purchase gold coins, but sweeps coins are never for sale. Instead, you receive free sweeps coins as part of gold coin packages or via various bonuses or contests.
Everything You Need to Know About Sweepstake Legality in the US
As stated earlier, sweepstakes casinos operate with virtual currency – gold coins and sweeps coins – and this is crucial to their legality. To understand how sweepstakes casinos maintain legal status, let’s delve into the fundamental aspects of gambling as defined by federal laws:
- Chance: Refers to the random nature of determining outcomes in sweepstakes casino games. The winners are randomly chosen, guaranteeing every player has a fair chance at claiming the prize, regardless of skill level.
- Prize: Anything of value that players can win in sweepstakes casinos, often in the form of cash rewards or gift cards. The anticipation of winning is a significant motivator for participation.
- Consideration: Involves exchanging money for the opportunity to play casino games. On traditional online casinos, consideration comes in the form of placing cash wagers to play games, and this is the primary delineating factor between these sites and sweepstakes platforms.
Social casinos can achieve legal status by eliminating one or more of these key elements. Legal sweepstakes casinos remove consideration since players use virtual currency instead of placing real cash bets. Social casino operators generally provide means of free entry to ensure that players do not have to make a purchase to become eligible for cash prizes. These platforms give out free coins with which you can enjoy your favorite games and possibly win real money prizes at no cost.
The Federal Trade Commission (FTC) is responsible for regulating sweepstakes casinos in the US at the federal level. For sweeps casinos to be considered legal, the commission requires them to adhere to the no purchase necessary law. This way, players can win cash prizes without spending a dime.
The FTC also mandates sweepstakes casino operators to provide an alternate mode of entry (AMOE) for obtaining free sweeps coins. To fulfill this requirement, most sweepstakes casinos offer a mail-in bonus, where players can send handwritten letters to their headquarters requesting sweeps coins. Additionally, legal sweepstakes casinos must provide clear information on their terms and conditions page detailing the available prizes, odds of winning, and the steps involved in claiming a prize.
Individual states also enact laws to regulate online gambling within their borders. States like Washington completely prohibit the activity, and others like Idaho and Nevada restrict users from redeeming cash prizes with sweeps coins.
In addition to federal laws, states also exert regulatory control on social casinos. Generally, sweepstakes casinos can operate legally in most US states as long as they adhere to federal regulations. However, specific states enforce additional regulations, while some ban all forms of online gaming, including sweepstakes operations. Here is a list of all the states where sweepstakes casinos are legal:
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- West Virginia
States Where Sweepstakes Are Illegal
Certain states also impose restrictions on sweepstakes sites, particularly concerning prize redemption. The best way to verify if an online casino accepts and pays out real money prizes to players from your state is by reading its terms and conditions or an in-depth review on our page. Although sweepstakes online casinos are technically legal in the following states, there are certain restrictions you should be aware of:
- Washington: This is the only state that prohibits sweepstakes casinos entirely, so players from WA are usually unable to even register on social gaming sites.
- Idaho: If you reside in Idaho, you will be unable to play games in sweepstakes casinos with sweeps coins. The state’s gambling laws prohibit residents from receiving cash prizes for playing games of chance like sweepstakes titles. You can only win real cash prizes for playing games of skill.
- Nevada: The situation in Nevada is similar to what we have in Idaho. Players can enjoy casino-style games with free gold coins but cannot enter promotional competitions using sweeps coins.
- Michigan: In September 2023, Golden Hearts Games was ordered to cease operations in Michigan following some state investigations. Recently, VGW, the parent company of LuckyLand Slots and Chumba Casino, announced it would be pulling out of the state by February 2024. However, I don’t think Michigan’s crackdown on sweepstakes casinos should be that much of a bother since it is one of the 6 states where traditional online casinos are legal.
- Wyoming and Utah: I noticed that sweepstakes casinos owned by A1 Development LLC are restricted in Wyoming and Utah. These casinos include NoLimitCoins, Funrize, and TaoFortune.
What Happens If You Play in an Illegal Online Sweepstake Casino?
Playing casino games in an illegal sweepstakes casino can lead to serious consequences, both legally and financially.
- Legal Consequences: Depending on the jurisdiction and severity of the violation, you may have to pay fines or even face criminal charges. For example, illegal online gaming is a Class C felony in Washington, and offenders face penalties of up to 5 years in prison and/or a $10,000 fine. In most states, however, playing games on illegal sites is classified as a misdemeanor.
- Financial Risks: If a sweepstakes casino flagrantly flouts a state’s gambling laws, you already know it won’t adhere to fair gaming practices, and there’s no guarantee you’ll ever receive your winnings. Also, illegal sites hardly adhere to standard security measures, potentially exposing your financial information to fraud or theft.
- Limited Support: Illegal sweepstakes casinos do not prioritize customer support, so if you encounter an issue or have questions, you’re on your own. While they might be eager to help when you’re trying to purchase virtual currency, they are often nowhere to be found once it is time to pay out winnings.